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YouTube Ordered To Pay $1.6 Million To ASCAP

Legal Issues

from the making-sausages dept

Tue, May 19th 2009 12:12pm -

You may remember last year around this time, a district court set a totally arbitrary royalty fee that AOL, Yahoo and RealNetworks had to pay ASCAP for music streamed over their services. Reading through the details of the decision was immensely troubling, because it seemed to calculate the amounts on a somewhat meaningless formula based on taking a percentage of revenue from the companies that had absolutely nothing to do with music itself. Basically, it looked at almost any revenue that somehow sorta kinda touched on music (including search) and included that as part of the calculation process. Recently, ASCAP and Google went through a similar case in front of the same district court to determine just how much Google has to pay ASCAP for all the music streamed on YouTube. To be honest, I’m still not sure why it makes sense that Google has to pay anything for this, but that’s one of the oddities of modern copyright law.

While the decision hasn’t received much press attention, last week, the court ordered Google to pay $1.6 million to ASCAP (thanks to Eric Goldman for sending me the decision). The court seemed to take a “split the difference” approach, as ASCAP had asked for $12 million for all music streamed between 2005 and the end of 2008 (and another $7 million for 2009). YouTube, in response, had suggested $79,500 for 2005 through the end of 2008 and then $20,000 per quarter ongoing. The court rejected both proposals, and dinged both companies for weakly supporting their positions, or being somewhat misleading in their assertions. Google, for instance, tried to focus on the number of “music videos” as compared to the total number of videos on YouTube, though the court noted that the music videos seem to get a lot more views than many of those other videos, and it doesn’t take into account the time spent viewing each video. ASCAP basically said: “just take that formula you used last year for AOL, Yahoo and Real and apply it to Google revenue.”

The court, instead, went into a lengthy justification of trying to come up with a “fair” proposal, involving an awful lot of redacted information on YouTube’s revenue (though… if you work through all the numbers you might be able to piece back together some revenue info) and eventually came up with $1.4 million for 2005 through 2008, and then $70,000 per month afterwards, which, when added to the additional fees this year, brought it up to $1.61 million to date (and counting). Of course, this is all supposed to be a temporary sort of thing until the two sides can work out an agreement on their own — but given the vast differences in proposals (as the court noted, ASCAP was asking for a rate 150 times as large as YouTube’s proposal), it doesn’t seem like the two sides are close.

Either way, reading this ruling as well as last year’s ruling shows what a total mess this process is. Basically, ASCAP gets to go in and demand cash from anyone who benefits from music anywhere, and a judge sorta randomly makes up reasons to give them cash. I know that ASCAP supporters will claim that the money is for songwriters, not the record labels, and it’s important and blah blah blah. But the whole system of such collective licenses is a mess that it makes it close to impossible to do anything with music without getting yourself into a huge licensing hole. For more than a century now, Congress and the courts seem to look at every innovation and simply slap another license fee on it, and leave it to the courts to sort out any mess. All of these license fees add up to a massive tax on innovation that divert money from good business models and into the hands of collections societies, who siphon off a piece and often don’t do a very good job distributing that cash. It’s a massively inefficient model that’s simply not needed.

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Companies: ascap, google, youtube

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Comments on “YouTube Ordered To Pay $1.6 Million To ASCAP”

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67 Comments
AJ says:

I would...

Start off by removing all Label/AA’s submitted music from you tube. Keep the user generated material, but remove everything else from these guys, then point at ASCAP and blame them for doing so. Start a war between the Label’s//AA’s and ASCAP. Or find some other cleaver way to make them loose money by removing their material. They really need to set an extreme example to stop all this nonsense.

Osno says:

What for?

Can I have YouTube back, now? Since they started taking down videos the service is almost useless. 2 recent examples: 1) I can’t watch SNL clips because of location (which reminds me of Hulu :S) and 2) yesterday I wanted to watch the Alien Song, and it’s also blocked. The sad part is that Google is paying, people are not watching and we’re back to web hunting for this content that was easy to find and convenient. Progress in the hands of lawyers doesn’t look good at all.

Cap'n Jack (profile) says:

Google's fault.

I blame Google. They’re really dropping the ball. They have the resources to fight these things.

All the limitations on YouTube are only going to slowly, but surely, push consumers further away from the service. I wanted to share an SNL clip on Facebook, but YouTube removed it due to copyright infringement. So, I went to DailyMotion instead. Knock one down, another will rise in its place.

It’s almost like record labels, TV networks and movie studios don’t want fans.

OKVol says:

ASCAP is the enforcer

They collect the money to distribute it to the record companies and artists. If they can find the artists. If they can’t, they keep the money. Guess how hard they try…

For this, they have radio receivers hooked to song recognition systems in each town listing for what is played. But how do they snoop what is played on youtube?

JB says:

This will help drive a business transition

While I agree that giving ASCAP money seems like a step backwards, I can see one potential positive.

ASCAP may now want You Tube to be successful. For the music industry to figure out the Internet, they need to perceive that some portion of their success is tied to it.

The irony would be if someday ASCAP is driven to argue for You Tube and against newer competitors to protect its court ordered revenue flow!

Joe says:

I Quit

I quit listening to music years ago since all the corporations starting suing everyone. I also quit watching TV. I also had to quit fishing because the government taxed me. I pretty much quit everything, but breathing. I have to pay a tax on that also. I think I will go on welfare like most of the US is having to do during this recession. Will I get free music subsidies with my food stamps?

Rekrul says:

Google should take YouTube offline for a month and replace it with a page that says “YouTube has been shut down thanks to the demands of ASCAP, the RIAA, MPAA, TV Networks and every other content owner who thinks they can squeeze money out of us. Please contact them at the phone numbers below and let them know how you feel.”

mobiGeek says:

Re: Re: Re:

And yet they keep it running. Guess this “free” model isn’t working for them. How ever will Google survive??

Looking at a single entity and saying that it is “losing millions” is myopic. Sure, it would be nice to find a way for that one technology platform to earn more than it costs, but if it drives revenues in other areas it isn’t fair to label it as nothing but an expense hole.

I bet if Google decided to recoup that “million dollars a day”, it would cost them dearly.

anon says:

Re: Re:

If you think that Google isn’t making a ton of money off of Youtube, you’re mistaken. And the songwriters whose work is on there should benefit from the product that’s making money. If your song was placed on the #1 video on Youtube, and Youtube made a ton of money off those Million+ hits on that video, wouldn’t you want a piece of the pie? Especially if you’re legally entitled to it?

Tgeigs says:

Re: Re: Re:

“And the songwriters whose work is on there should benefit from the product that’s making money”

Fair enough, but then the artist should also have to pay the creators of YouTube if they wish for their work to remain up for popularity’s sake, since they would be using the product, which is the platform, which ALSO makes money for Google and, through popularity and exposure, the artist.

Or we could just call it even, waddya say?

Jan says:

ASCAP is . . .

I belong to ASCAP (the American Society of Composers, Authors and Publishers)so that I can be (royalties) each my music is performed. If you were a composer, the most important thing would be for people to hear your music. However, wouldn’t you want to be paid for your music — especially if that were your only source of income and the only way you could write more music and get it out there?

Mike (profile) says:

Re: ASCAP is . . .

However, wouldn’t you want to be paid for your music — especially if that were your only source of income and the only way you could write more music and get it out there?

Logical fallacy: claiming that this is the only way you could make money/write more music. If that crutch of a collection society weren’t there, there are many other ways to make money.

Kelly Reid (user link) says:

Re: "Does anyone really think ASCAP is going to distribute 1.6 million?"

ASCAP, as well as BMI, are both non-profit organizations (don’t ask me how they get away with this). Because they are non-profit they HAVE to, by law, disclose their finical situation, as in “income” and payments. Non-profits are required by the IRS to be financially transparent.

SESAC, another performance rights organization, is a for profit organization and does not have to disclose their finances.

What is funny though, from all of the music artists I know, SESAC pays quicker and more money to their artists. They are, however, a smaller and more select PRO.

trekman (user link) says:

Money In Their Pockets

The RIAA, ASCAP, & Copyright Royalty Board (CRB) may act & pretend they are doing it for the artist’s, musicians or song writers. But are only in this for themselves. They DO have a hidden agenda and will do anything to get what they want.

I said years ago when they started going after people/groups that they wouldnt stop until they had ruined the industry. Going after royalty monies from internet radio, mainstream radio, websites that play videos is only the start.

Soon they will go after websites that sell music. Mark my words today. If a website uses music in any way, shape or form they WILL eventually go after them.

And in the end only hurting or killing off the market they are attacking!!

Carter Burwell (user link) says:

ASCAP

It’s true that the licensing “system” is inefficient – it would be more transparent if people paid for music when they used it. It’s not true that ASCAP has anything to do with record companies – it’s a non-profit owned by composers, songwriters and publishers.

I’m a composer, I work freelance, and my family and I depend on ASCAP to collect money from the use of my music – surely that seems fair. Calculating the value of music, or any other content, is nearly impossible, but the internet is a free-market of ideas and if the price of some commodity, like music, is too great it’s easy to use less of it, or for users to make it themselves.

I assume those who describe YouTube as an “innovation” will agree that its use of old, pre-existing music and old, pre-existing video is hardly that. It really should be about making something new, and I encourage you ask:
What does old music have to do with innovation?

trekman (user link) says:

Someone ends up getting hurt!

I do agree with you Carter. I believe that composers, writers, musicians are all due a fare share of any monies made on their music. Ive always felt that way. I get payed for my work. So should they (you).

But when it effects the industry and only hurts it, thats not logical thinking. It is the thoughts of someone that doesnt have your interest at the top of their agenda.

Michael Garcia-Beard (user link) says:

Licensing/Copyrights

I think if this practice of taking Google and other web companies to court continues it will kill the MAJOR label industry fast. I am an indie singer/songwriter registered with BMI and I personally feel that when you are doing marketing and promotions you should be encouraging sites such as Google to play your music,interviews,videos whatever.This gives the fans the opportunity to really get to know an artist. If they continue to fight this they will only end up in a losing battle in the end.

TonsoTunez (profile) says:

Well, Mike, Wrong Again

Mike says: ASCAP gets to go in and demand cash from anyone who benefits from music anywhere, and a judge sorta randomly makes up reasons to give them cash.

ASCAP operates under a consent decree mandated by the
Department of Justice.

Under the terms of the decree, ASCAP must license its catalog to anyone – or any organization – that requests a license.

Once the request is made the requesting party is licensed and may immediately use the music in the ASCAP catalog subject to the requirement that they immediately enter into negotiations regarding the fees to be paid. If the fees can’t be agreed upon, the consent decree requires that the parties must have the rates set by a rate court.

YouTube requested a license … negotiations were entered into, but, the parties could not agree upon a fee.

A rate court proceeding was convened.

The proceedings are exactly the same as in any other court. Evidence is gathered and presented and witnesses are called to establish each sides position in the matter. Then the judge, after carefully taking everyone’s point of view under consideration, comes up with the rules to be followed and the fees to be paid.

The proceedings can become quite lengthy and intense – not to mention costly – but one thing is without doubt – the results are never because the judge “sorta randomly makes up reasons to give (ASCAP) cash.

The very first order of business is always to determine whether ASCAP is due anything pursuant to the U.S. Copyright Law. Nothing proceeds unless the answer to that question is ‘yes.’ Of course, YouTube knew the answer at the outset or they wouldn’t have requested a license.

To head off what would have been an appropriate discussion on this list, you state, “I know that ASCAP supporters will claim that the money is for songwriters, not the record labels, and it’s important and blah blah blah …”

Well, just so you won’t be disappointed, the money collected by ASCAP is for songwriters, not the record labels, and it’s important and blah blah blah …

Why are you always so dead set against paying anything to anyone who creates music? Your message is always that artists, musicians, songwriters are such worthless human beings that don’t deserve to be paid for their innovative creativity.

Google is a business … writing music is a business … ASCAP is the agent for those who are in the business of writing music …

Google is a huge business using its might, muscle and money to trample everything in its sight – little guy, big guy any guy that gets in their way … The use of other peoples music (without paying) has been a huge part of their success story … However, in the case of songwriters, they have acknowledged – by requesting a license – that something is due the creators of music who are mostly small, independent business people.

So, it was Google that preferred to have a court determine what that payment should be rather than entering into productive negotiations with the writer’s agent, ASCAP.

The procedure is well defined by the Department of Justice … The way to a resolution was clear … there is nothing at all messy or inefficient about the process as you suggest.

Rediculous says:

Rediculous

Mike says: ASCAP gets to go in and demand cash from anyone who benefits from music anywhere, and a judge sorta randomly makes up reasons to give them cash.

This is true.

ASCAP is contacting people (I was) and saying they need to get a license for embedding YouTube videos. They claim any website is “helping” the transmission of their materials even if the website in question hosts or streams nothing. They claim every website needs a $340 license even though the primary purpose of the website may be about something different than music and the video(s) may not contain any music whatsoever by any of their represented artists. Oh, and if you make money from your website that has videos on it, they want a proportion of that as well and have a calculation to determine it based on your total page impressions.

They use page impressions since one naturally has no idea what videos are played how many times and what music may or may not be in them besides the creator and publisher.

Mike is right in their crazy calculation. Let’s say you embed a Hulu video on your website. ASCAP will ask for a $340 “New Media” URL license from you because that video “may” contain a piece of music work from one of their clients and they will take you to court to get money regardless of whether there was or wasn’t.

They will agree that the video creator and/or publisher has most likely already paid a licensing fee to use the material in the piece of work but they now want money from any website embedding the video.

So what’s next? I assume BMI and SESAC will also come and demand a free payment from websites who have any kind of video embedded because it may or may not contain some sort of music by someone they may or may not represent.

Somebody needs to stop the madness.

joeasfr says:

My way or.

Real simple, anything that in anyway makes RI@@ or ncap or whoever these aholes go by these days, I never pay for and get for free, How?

There are ways to make you very difficult to find on the internet and encrypting your hard drive in such a way that the hard drives turns into Zero’s upon tampering.

and since =))))) I dont do anything illegal ever I dont get any papers because little do they know im actually on the West coast right now…. well actually on the east now… wait… hehe

Musician songwriter says:

The adult answer is..

YouTube’s success in creating billions of views and dollars in advertising hinges around the free music videos they’ve been using without permission. If a song costs $2000 to record and a music video cost $20000… an investment made by a record company, why are they expected to give away their product for free? Just because it’s digital and easily copied, people think it should be free.
Musician’s will make their living how? It’s hard enough getting music good enough to record, raise the money to record it, find an audience who appreciates it and then what? Have someone draw a million hits or billions on their website and their mad because they have to pay? Maybe it’s the artists that should go on strike, remove all music from radio, tv, film, and the internet and let’s see what a great world that would be???
I thought the suit against youtube should have been easily in the hundreds of millions. How many thousands of musicians and songs do they have to split the revenue with? 1.6 million divided by 100,000? equals $16 per musician (or song) for 4 years of royalties. Yeah you’re right, ASCAP sure is a mean one, looking out for the rights of those who actually own the material.

veronicamorales (profile) says:

Everyone have a point...

everyone have a point though all the websites listed and ASCAP is a business that do their work. everyone wants something free but not everything is free. I may love using Google or Youtube to watch the videos i love yet i must also think for the musicians. Concerned people should discuss things about this and agree with something because everyone is looking forward to watch the video that they want though if their is something that people agreed with atleast users won’t expect that much.

Regards to all,
Nica | College Papers

Dom K (profile) says:

youtube used to be fun

If this is the the thing that has swamped youtube recently it has ruined my enjoyment of the service. All the best videos are being deleted.

Where once i could listen to all my favourite songs these are being removed, where I take the point and understand copyright law, the fact that most users are simply playing the track doesn’t seem to register.

Its like everything good, always seems to come to a demise eventually
bring back content | move to australia

Buzz (user link) says:

Like Suing MTV in The 90's

The problem with this lawsuit and I hear they may want to start going after individual websites is that Youtube is now to music videos what MTV was in the 90’s and early 2000’s. No one watches music videos on TV but instead go to Youtube to check them out and even the artists are placing Youtube videos on their websites. I don’t understand how they can try to get royalties when they are the ones uploading them for promotional use. If they don’t want to pay out the royalties then they should upload them to their own websites with no embedding. The problem with that is they wouldn’t get a 1/4th of the exposure and click-through traffic their experience now.

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